May 29, 2018

Truckers’ Strike Paralyzes Brazil as President Courts Investors

By Shasta Darlington and Manuela Andreoni

SÃO PAULO, Brazil — Brazil is roaring back, at least according to President Michel Temer.

That
was the message Mr. Temer’s government sought to convey in a series of
upbeat statements issued over the past couple of weeks leading up to a
foreign investment forum that begins Tuesday in São Paulo.

Yet
a weeklong standoff between striking truck drivers and the government
has provided a stark counternarrative, illustrating the shaky recovery
of Brazil’s economy, Latin America’s largest, and the widespread disdain
Brazilians have toward their ruling class.

Hundreds
of trucker roadblocks sealed off highways across the country as a
protest against rising fuel prices ground Brazil’s economy to a halt in
recent days. Gas stations from São Paulo, the financial capital, to
Manaus, in the heart of the Amazon, have run out of fuel.

Dozens
of flights have been canceled, fresh food supplies in supermarkets have
dwindled and millions of chickens and pigs have been culled because of a
lack of animal feed. On Monday, many schools and universities suspended
classes.

An
announcement by Mr. Temer on Thursday that he had struck a deal with
the strike leaders proved premature. Roadblocks were maintained through
the weekend and oil workers announced that they intended to go on strike
this week, raising the prospect of a deepening crisis that has laid
bare the weakness of Mr. Temer’s lame-duck government ahead of a
presidential election in October.

Over
the weekend, Mr. Temer issued an order authorizing the military to
clear roads using force, if necessary, a move that drew condemnation
from human rights groups.

But
after that threat failed to bring the strike to an end, Mr. Temer
appeared weary as he announced in a televised statement on Sunday that
the government would subsidize the cost of diesel to drop the price at
the pump by 12 percent. He also said truck drivers would pay less in
tolls and get more government contracts. The measures were striking
concessions by a government that has sought to rein in spending as
Brazil emerges from a long, crippling recession.

“Our
fundamental and correct concern is with the truckers and I understand
their difficulties,” said Mr. Temer, the most unpopular president in
modern Brazilian history, according to polls. “We all understand the
natural difficulties of truckers in their work.”

Fuel
costs have soared in Brazil as oil prices have risen globally, and the
real, Brazil’s currency, has depreciated. Under the current policy, the
price of diesel fuel has fluctuated on an almost daily basis. As part of
the latest agreement, diesel price adjustments will occur on a monthly
basis.

Image

Members
of Brazil’s security forces gathered outside a fuel distribution center
near Rio de Janeiro on Sunday as truckers took part in a protest
against high diesel fuel prices.CreditRicardo Moraes/Reuters

Union
leaders have urged drivers to accept the latest deal. But on Monday, as
fuel tankers escorted by police officers and soldiers began to restock
some gas stations, many protesters held firm.

“The
government has now met all of the demands in relation to diesel prices,
and at a very high cost to public coffers,” said Laura Barbosa de
Carvalho, a professor of economics at the University of São Paulo, who
pointed out that taxpayers would ultimately pick up the tab. “But the
big question is: Is this movement still focused on the price of diesel
or does it have a bigger component that wants to destabilize the
country?”

Mr. Temer’s
speech on Sunday night prompted Brazilians frustrated by what they see
as a failed government to honk their horns and bang pots from their
windows in protest in many cities across the country. It was a sign of
the mistrust and outright hostility many Brazilians feel toward the
president.

A poll
published by the Globo website on Monday showed that 55 percent of
Brazilians disapproved of the strike, but a full 95 percent disapproved
of the way Mr. Temer has handled it.

The
strike has been the most disruptive period of unrest since Mr. Temer
helped lead an effort to impeach his predecessor, Dilma Rousseff, in
2016. Since then, Mr. Temer has spent much of his political capital
fending off accusations of corruption and obstruction of justice
stemming from the wide-ranging graft scandal known as Lava Jato, or Car
Wash.

On Monday
morning, roughly one hundred protesters gathered at an oil refinery on
the outskirts of Rio de Janeiro, which has been one of the focal points
of the strike. Truckers were a minority at the demonstration. But scores
of unemployed oil workers, motorcycle couriers and public
transportation workers said they wanted their grievances addressed as
well.

“This
started with the truckers, but it reached millions,” said Alexsandro
Faria, 39, an unemployed scaffold builder who worked at the refinery for
seven years before being laid off in 2016. “This is the best moment to
call attention to our demands. If we only stay on our sofas, complaining
about corruption, it won’t work.”

Several
strikers have voiced support for a military intervention, arguing that
the country was safer and more orderly during the dictatorship that
lasted from 1964 to 1985. While support for a step that drastic is by no
means widespread among strikers, calls for the military to step in have
riled up crowds at protest sites over the past week.

“It
isn’t just about the truckers anymore,” said Antonio Marcos Rocha, a
proponent of a military intervention who was wearing a Brazilian flag
around his waist as he distributed free sandwiches to a crowd outside
the refinery. “It’s against corruption.”

As
the protests have struck a chord with many Brazilians, politicians
across the political spectrum have taken aim at the increasingly
isolated and weakened president.

Leftist
leaders, who have traditionally championed workers’ rights, and
right-wing politicians both sought to portray themselves as champions of
the truck drivers as the government threatened to prosecute business
leaders who have backed the strike.

Image

People lined up for fuel in Rio de Janeiro on Monday, the eighth day of the truckers’ strike.CreditCarl De Souza/Agence France-Presse — Getty Images

The far-right presidential candidate Jair Bolsonaro, a federal lawmaker, declared on Twitter that any fines or imprisonment of truckers “would be revoked by a future honest president/patriot.”

Marina Silva, a center-left presidential contender and a former environment minister, criticized the government’s response.

“Once
more, the Temer administration uses the military to hide its
incompetence,” she wrote on Twitter. “With the increase in fuel prices,
society is paying prices that are too high for the mistakes of a
government that does everything to save its own skin and keep itself in
power.”

The timing
could hardly be worse for Mr. Temer as he sets out to promote Brazil’s
economic recovery before would-be foreign investors while defending the
legacy of his two years in office.

Mr.
Temer was recently mocked for unveiling a slogan that suggested that
Brazil had advanced 20 years in the span of two. Critics were quick to
point out that a slight variation in punctuation made the slogan convey
that Brazil had in fact regressed two decades in two years.

But
Mr. Temer sought to strike a bullish tone on Monday as investors
arrived in São Paulo, where fuel trucks have needed police escorts to
resupply airports.

“Brazil
is opening to the world and the world is reconnecting with Brazil,” he
said in a statement prepared for the event. He noted that on his watch,
inflation has dropped and interest rates have fallen to 6.5 percent from
14.25 percent, and investor confidence has begun to grow in his
market-friendly policies.

The
economy has pulled out of recession, but the recovery has been tenuous.
The value of the currency has slumped to a two-year low, in large part
because of uncertainty over Brazil’s political future. Voters have
turned their backs on the traditional parties mired in the corruption
investigation.

Mr.
Temer is set to leave office having failed to pass critical structural
changes he pushed for, including an overhaul of the bloated pension
system.

While truck
drivers weigh their options, oil workers unions have announced a
three-day strike starting on Wednesday to demand, among other things, a
reduction of fuel prices and the firing of Pedro Parente, the president
of the state-run oil company, Petrobras.

“The
government has tried to sell this idea that it solved the country’s
economic problems,” Ms. Carvalho, the economics professor, said. “This
crisis is evidence that it was never true.”